Currencies Are At An Important Inflection Point

The Yen ($XJY), the Euro ($XEU) and the US Dollar ($USD) are all at important inflection points this week. Stay tuned as this could really decide the direction of Gold, Silver and other commodities this week.

Starting with the Yen, this is a critical one to watch, Gold tracks it quite closely. With this close tracking, a break to the upside in the Yen could lead to a big move in Gold.

Next is the Euro ($XEU), which makes up more than half of the $USD index. If the Euro is moving higher, the Dollar almost has to move lower. However, we have been tracking the moves in the $XEU waiting for a big setup. The chart this week is at a major inflection point for trend. The Euro had a solid bounce this week after a 5-cent retracement. On a weekly chart, everything is aligned for a big bull move here. The RSI bouncing off of 50 which is a bull market trait. The MACD starting to turn while above zero is also a bull market trait. There is also no divergence between the price and the indicators on the larger time frame. Weekly waves on the MACD are not making lower highs yet, to clarify what I mean about a larger time frame. Also there is a big resistance line on this chart that is at 128. That would be a full 13 cent bounce in the Euro from 115. A corresponding move in the dollar lower, would really support Gold.

Looking at the US Dollar ($USD), we see the chart is also at a critical inflection point. The RSI gave us a bear market signal in July. After an oversold rally, the RSI is back up to 50, which could mark a topping level in a bear market rally before the $USD chart breaks lower. With the main dollar pattern over the last few years with lower lows and higher highs, this suggests instability. The MACD is well below zero which does not usually happen in a big bull market. From 2011 to 2016 the MACD always reversed higher near the zero line, not at deep, deep levels.

This looks like an important time to watch if the inflection will happen. What the charts are lining up for is a $USD drop, with the Yen and the Euro rising. If that does happen look for Gold to rise with the Yen.

For more information on this perspective, I recorded a new Commodities Countdown Video 2017-11-17 that explains the entire setup. It would be a worthwhile listen if you like to swing trade Gold, Silver or some of the other commodities. Commodities Countdown 2017-11-17. If it reverses and goes the other way, this is the defining time for the setup.

I have also updated my Commodities Countdown Chartlist of 30 important charts on November 17th. You can quickly browse through that by following this link. Commodities Countdown Chartlist.

Lastly, I would like to wish all of our American readers a happy Thanksgiving, and safe travels in the week ahead.

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About the author:Greg Schnell, CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. Based in Calgary, he is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the Market Technicians Association (MTA) and the International Federation of Technical Analysts (IFTA).
Greg is also the co-author of Stock Charts for Dummies (Wiley, 2018).
Greg joined StockCharts.com in 2012 and has be instrumental in helping launch a variety of new blogs and other commentary platforms. Presently, Greg contributes market analysis commentary to The Canadian Technician, Commodities Countdown and Don't Ignore This Chart blogs.
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